EXHIBIT 10
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement")
is entered into as of September 1, 2003 (the "Effective Date"), by and between
CMS Energy Corporation, a Michigan corporation (the "Company"), and Xxxxxxx
Xxxxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") desires
that the Company continue to employ the Executive and the Executive desires to
continue to furnish services to the Company on the terms and conditions
hereinafter set forth;
WHEREAS, the Board has designated the Organization and Compensation
Committee of the Board (the "Committee") to have the responsibility for
approving this Agreement on behalf of the Board and for administering the
Agreement's provisions; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions of the employment relationship of the Executive with
the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the Company and the Executive hereby agree as
follows:
1. Employment. The Company hereby agrees to employ the Executive, and
Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth. Executive's base salary shall be paid partly in cash and
partly in phantom stock units in the amounts and as specified in Sections 5(a)
(i) and (ii) of this Agreement.
2. Employment Period. The period during which the Executive shall
furnish services to the Company hereunder shall commence as of the Effective
Date and shall continue in effect until terminated pursuant to the provisions in
Section 6 related to Termination and in Section 9 related to Change of Control.
The period during which Executive is employed pursuant to this Agreement is
referred to as the "Employment Period."
3. Position and Duties. During the Employment Period, the Executive
shall serve as the Chief Executive Officer of the Company and shall have those
powers and duties of a management nature consistent with such position. In the
performance of his duties hereunder, the Executive shall report to the Board and
shall devote substantially all of his full working time, attention and energies
to the business of the Company as shall be necessary for him to carry out his
obligations hereunder. The provisions of this section are subject to the
authority of the Board of Directors and shareholders to designate the Chairman
of the Board of Directors and to elect Directors.
4. Place of Performance. The principal place of performance of the
Executive's duties hereunder shall be at the Company's principal corporate
offices at One Energy Plaza in Jackson, Michigan, subject to reasonable travel
requirements on behalf of the Company.
5. Compensation and Related Matters.
(a) Base Salary.
(i) Cash Portion. During the Employment Period, the Company
shall pay the Executive, in cash, a base salary at the rate of
$33,334.00 per month (the "Cash Base Salary"), payable in
installments of $16,667.00 per pay period in accordance with the
Company's regular payroll practice for its senior executives, as
in effect from time to time.
(ii) Salary Equivalent/Phantom Stock Units. During the
Employment Period, in addition to the Cash Base Salary, the
Company shall provide to the Executive a "salary equivalent" as
follows:
(1) Number of Phantom Stock Units. On the first day of
each month during the Employment Period (the "Grant Date"),
the Executive shall be granted a whole number of phantom
stock units (also called "Stock Units") equal to the
quotient obtained by dividing (A) $70,833.00 by (B) the
closing trading price of a share of the Company's common
stock, par value $.01 per share ("Common Stock") as reported
on the NYSE Composite Tape for the last trading day of the
immediately preceding month. All Stock Units shall be fully
vested in the Executive as of the date of grant. The
Committee reserves the right to review and adjust the value
stated in clause (A) above, and the result of Committee's
changes shall be used on a prospective basis in computing
the number of Stock Units granted to Executive.
(2) Dividend Equivalents. In the event a dividend is
paid or other distribution is made with respect to the
Common Stock, the Executive shall be granted, as of the
dividend payment date (or the date such non-cash dividend or
other non-cash distribution is made) (the "Dividend Grant
Date"), an additional whole number of fully vested Stock
Units equal to the quotient of (A) the amount of the cash
dividend that would have been paid (or, in the event of a
non-cash dividend or other non-cash distribution, the value
of such dividend or other distribution, as determined by the
Committee, that would have been made) with respect to the
number of shares of Common Stock covered by the Stock Units
held by the Executive on the record date for such dividend
or other distribution and (B) the closing trading price of a
share of Common Stock on the last trading day immediately
preceding such payment or distribution date.
(3) No Fractional Stock Units. For purposes of this
subsection 5(a)(ii), fractional Stock Units resulting from
the above-described computations shall be disregarded.
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(4) Nontransferability. The Stock Units may not be
sold, assigned, transferred or otherwise encumbered by the
Executive.
(5) Equitable Adjustments. In the event that the Board
shall determine that any recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation,
spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event (other than any
cash dividend or other non-cash dividend or distribution
covered by clause (2) above), affects the Common Stock such
that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of the Executive with
respect to Stock Units previously granted pursuant to this
Agreement, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate
to the number of Stock Units theretofore granted to the
Executive hereunder.
(6) Rolling Cash Payments for Stock Units. On the
first business day following the second anniversary of each
Grant Date and each Dividend Grant Date, there shall be a
"Settlement Date" on which the Executive shall receive from
the Company a cash payment equal to the closing trading
price of a share of the Common Stock on the Settlement Date
times the number of Stock Units granted to the Executive on
the Grant Date or Dividend Grant Date, as applicable, two
years earlier pursuant to this Section 5(a)(ii), adjusted,
if applicable, pursuant to clause (5) above; provided,
however, that if the Executive's employment terminates by
reason of his death or the Executive dies following the
termination of his employment and prior to the final
Settlement Date such cash payment shall be made as soon as
practicable following each remaining Settlement Date, to the
Xxxxxxx & Xxxxxxxx Xxxxxxx Irrev Trust X/X/X 00/00/00, XXX
DTD 3/7/2001, and if that is not possible for any reason
then to the Executive's estate.
(b) Incentive Compensation. Executive agrees that he will not
be eligible to participate in the Annual Officer Incentive Compensation
Plan for CMS Energy Corporation and Its Subsidiaries, as approved by
Committee on May 23, 2003 ("ICP") or as modified subsequent to this
Agreement. In lieu of such participation, at the end of each fiscal
year of the Company during which Executive was continuously employed
and for a partial fiscal year in which the Employment Period was
terminated, the Committee shall review the performance of the Executive
and shall provide the Executive incentive compensation as provided
below in accordance with this section of the Agreement, if any, as
shall be determined by the Committee in its sole discretion. Any
incentive compensation granted pursuant hereto shall be awarded in the
form of phantom stock units, the number of which shall be equal to the
quotient obtained by dividing (A) the amount of incentive compensation
determined by the Committee for a particular fiscal year by (B) the
closing trading price of a share of Common Stock on the last trading
day of the immediately preceding month. Fifty percent (50%) of the
phantom stock units received as incentive compensation with respect to
any fiscal year shall be
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converted into cash at a point in time 12 months after the date of the
grant of incentive compensation by the Committee and the remaining
fifty percent (50%) shall be converted into cash 24 months after the
date of the grant. The cash payment made at each of these dates shall
equal the closing trading price of a share of Common Stock on the last
trading day of the immediately preceding month times the number of
phantom stock units being converted to cash. The amount of incentive
compensation, if any, awarded by the Committee to Executive pursuant to
this section of the Agreement shall be done consistently with the
interpretation and application of the provisions of the ICP, except
that Executive's Individual Award shall be determined for each
Performance Year (referred to above as a "fiscal year") under ICP by
applying the composite performance factor under ICP to $1 million in
such fashion so that Executive's annual amount of incentive
compensation would be $1 million for a full fiscal year of employment
(and pro-rated for a partial year of employment) at a composite
performance factor of 100%, and be subject to adjustment up and down
for the maximum and minimum composite performance factors used for any
Performance Year under ICP.
(c) Performance Incentive Plan. Executive agrees that he will not
be eligible to participate in the CMS Energy Corporation Performance
Incentive Stock Plan as amended and restated effective December 3, 1999
(the "Plan") or as modified subsequent to this Agreement. In lieu of
granting Executive stock options or restricted stock pursuant to the
Plan, the Company reserves the right in its sole discretion to award
Executive restricted phantom stock units from time to time. The first
award of 125,000 restricted phantom stock units shall be made within 10
days after both parties sign this Agreement. If, at a vesting date
specified below, Executive either remains employed pursuant to the
terms of this Agreement or remains as a member of the Board, then
Executive shall become vested in such restricted phantom stock units in
accordance with following vesting schedule: 31,250 Stock Units shall
vest on September 1, 2005; 31,250 Stock Units shall vest on September
1, 2006, 31,250 Stock Units shall vest on September 1, 2007 and 31,250
Stock Units shall vest on September 1, 2008. Within 10 days after
vesting, the Stock Units shall be converted into cash. The cash
payments made at each of the specified dates shall equal the closing
trading price of a share of Common Stock on the last trading day of the
immediately preceding month times the number of Stock Units being
converted to cash. In calendar year 2004 and beyond, the Committee will
determine in its sole discretion the amount, if any, of additional
restricted phantom stock units that will be awarded to Executive, the
schedule for their vesting, the terms controlling their vesting and the
date(s) on which they would be converted to cash.
(d) Other Benefits. During the Employment Period, the Executive
shall be entitled to participate (subject to uniformly applicable
requirements for participation) in any health, disability, profit
sharing, retirement or insurance plans maintained by the Company from
time to time and shall be entitled to receive such perquisites and
fringe benefits as are provided by the Company from time to time, in
each case for the benefit of its executive officers at Grade Xxxxx X-0,
provided
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however that Executive shall also continue to receive (i) the same life
insurance benefit that a non-employee director of the Company receives
and (ii) the same retirement benefit that a non-employee director of
the Company receives until Executive leaves the Board.
(e) Business Expenses. During the Employment Period, the Company
shall, upon submission of proper vouchers in respect thereof, pay or
reimburse the Executive in accordance with the Company's reimbursement
and expenses policies, as in effect from time to time, for all
reasonable business expenses incurred by the Executive in connection
with the Company's business.
(f) Post-Employment Period Review. Upon conclusion of the
Employment Period, the Board shall review the performance of the
Executive and shall provide the Executive such monetary or other
recognition, if any, as shall be determined by the Board in its sole
discretion.
6. Termination. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) Death. The Executive's employment shall terminate upon his
death.
(b) Termination by the Company or by the Executive. The Company
may terminate the Executive's employment during the Employment Period
for any reason, with or without cause, upon 30 days' prior notice. The
Executive may terminate his employment during the Employment Period for
any reason, upon 30 days' prior notice. Any termination of the
Executive's employment by the Company or by the Executive pursuant to
this Section 6(b) shall be communicated by written notice of
termination to the other party hereto in accordance with Section 11.
7. Compensation Upon Termination of the Employment Period. Upon
termination of the Employment Period, the Company shall (i) pay as soon as
practicable thereafter to the Executive, or if he is deceased, to the Xxxxxxx &
Xxxxxxxx Xxxxxxx Irrev Trust X/X/X 00/00/00, XXX DTD 3/7/2001, and if payment to
the trust is not possible for any reason, then to the Executive's estate, a lump
sum in cash equal to any Cash Base Salary under Section 5(a)(i) which has been
earned but not yet paid, and reimbursement of any expenses incurred by the
Executive in respect of periods through the date of termination, (ii) pay as
soon as practicable thereafter to the Executive, or if he is deceased, to the
aforementioned trust, and if payment to the trust is not possible for any
reason, then to the Executive's estate, any incentive compensation under Section
5(b) that has yet to be converted to cash and paid to Executive, and any
restricted phantom stock units under Section 5(c) that have yet to vest and been
paid to Executive in cash and (iii) pay to the Executive, or if he is deceased
to the aforementioned trust, and if payment to the trust is not possible for any
reason, then to the Executive's estate, the cash payments specified in
settlement of Stock Units at the times otherwise provided herein in Section
5(a)(ii)(6). No new grants pursuant to Section 5(a)(ii) of this Agreement shall
be made to Executive following the termination of this Agreement pursuant to
Section 6. When this section of the Agreement is
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invoked in order to convert Stock Units and restricted phantom stock units under
Section 5(c) to cash, the conversion shall be based upon the closing price of a
share of Common Stock on the last trading day of the month immediately preceding
the month in which the conversion is taking place.
8. Non-Competition, Non-Solicitation and Confidentiality Requirements.
(a) Non-Competition Requirement. During the Employment Period and
during the one-year period thereafter (the "Noncompetition Period"),
the Executive, acting alone or with others, directly or indirectly,
shall not engage, whether as employee, employer, consultant, advisor or
director, full or part-time, or as an owner, investor, partner or
stockholder (unless the Executive's interest is insubstantial), in any
business in an area or region in which the Company or any of its
subsidiaries or affiliates then conducts business, which business is
directly in competition with a business then conducted by the Company
or any of its subsidiaries or affiliates. For purposes of this Section
8(a), the Executive's interest as a stockholder shall be considered
insubstantial if such interest represents beneficial ownership of less
than one percent of the outstanding class of stock, and the Executive's
interest as an owner, investor or partner shall be considered
insubstantial if such interest represents ownership, as determined by
the Committee in its discretion, of less than one percent of the
outstanding equity of the entity.
(b) Non-Solicitation Requirement. During the Noncompetition
Period, the Executive, acting alone or with others, directly or
indirectly, whether as employee, employer, consultant, advisor or
director, or as an owner, investor, partner, stockholder or otherwise
(i) shall not solicit or induce any client or customer of the Company
or any of its subsidiaries or affiliates, or entity with which the
Company or any of its subsidiaries or affiliates has a business
relationship, to curtail, cancel, not renew or not continue his or her
or its business with the Company or any of its subsidiaries or
affiliates, (ii) shall not hire any person who is then, or who within
90 days prior to a termination of the Executive's employment, was an
employee of, or a consultant or independent contractor to, the Company
or any of its subsidiaries or affiliates and (iii) shall not solicit or
induce any person who is an employee of, or a consultant or independent
contractor to, the Company or any of its subsidiaries or affiliates to
curtail, cancel, not renew or not continue his or her or its
employment, consulting or other relationship with the Company or any of
its subsidiaries or affiliates.
(c) Ethics and Confidentiality Requirements. In addition to
complying with all provisions stated in the CMS Energy Code of Conduct
and Statement of Ethics Handbook (June 2003) and other corporate
policies, as they currently exist or are subsequently put into place,
the Executive shall not take, disclose, use, sell or otherwise
transfer, except in the course of employment with the Company, any
confidential or proprietary information of the Company or any of its
subsidiaries or affiliates, including but not limited to information
regarding current and potential customers, clients, counterparts,
organization, employees, finances and financial results, and methods of
operation, transactions and investments, so long as such information
has not otherwise been disclosed to the public or is not otherwise in
the public domain, except as required by law or pursuant to legal
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process. The Executive shall return to the Company, promptly following
the Executive's termination of employment or, if a demand for such
return has been made, at any other time, any information, documents,
materials, data, manuals, computer programs or devices containing
information relating to the Company or any of its subsidiaries or
affiliates, and each of their customers, clients and counterparts,
which came into the Executive's possession or control during his
employment.
(d) Injunctive Relief. The Executive acknowledges that a breach of
the restrictions contained in this Section 8 shall cause irreparable
damage to the Company, the exact amount of which shall be difficult to
ascertain, and that the remedies at law for any such breach shall be
inadequate. Accordingly, the Executive agrees that, if the Executive
breaches any of the restrictions contained in this Section 8, then the
Company shall be entitled to injunctive relief, without posting bond or
other security in addition to any other remedy or remedies available to
the Company at law or in equity. This Section 8 shall survive
termination of the Executive's employment hereunder.
9. Successors and Change of Control; Binding Agreement. This Agreement
is personal to the Executive and, without the prior written consent of the
Company, shall not be assignable by the Executive. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives. This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the "Company" shall mean
both the Company as defined above or any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise. Except for the
first two sentences which shall survive, the balance of this section shall be
superseded, and thereafter have no legal force and effect, by any change of
control agreement signed by the Executive and the Company subsequently to this
Agreement's Effective Date.
10. Indemnification. The Company shall indemnify, to the fullest extent
permitted by applicable state law and the by-laws of the Company, all amounts
(including without limitation judgments, fines, settlement payments, expenses
and attorney's fees) incurred or paid by the Executive in connection with any
claim, action, suit, investigation or proceeding arising out of or relating to
the performance by the Executive of services for, or the acting by him as a
director, officer or employee of the Company, any subsidiary of the Company or
any other person or enterprise at the Company's request (collectively,
"Claims"). During the Executive's employment with the Company and following the
termination of the Executive's employment with the Company for any reason, the
Executive shall be covered with respect to any Claims under any director's and
officer's liability insurance policy maintained by the Company which covers
other similarly situated executives of the Company. This Section 10 shall
survive the termination of the Executive's employment hereunder.
11. Notices. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have
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been duly given when delivered or (unless otherwise specified) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxxxx Xxxxxxx
0000 Xxxxxxx Xxxx Xx.
Xxxxxxxxxx Xxxxx, XX 00000
If to the Company:
CMS Energy Corporation
Xxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
or to such other address as any party may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12. Amendment or Modification, Waiver. Executive and the Company agree
that as of the Effective Date of this Agreement, the provisions of the
Employment Agreement, dated as of June 1, 2002, are superseded in their totality
by the provisions of this Agreement, except that (i) provisions of Section
5(a)(6) shall continue to be applicable until the Stock Units received under
said Employment Agreement are converted to cash and (ii) provisions of said
Employment Agreement expressly deemed to survive its termination or expiration
shall continue to survive. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and an authorized officer of the Company
after approval of the Committee. No waiver by any party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by any such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time.
13. Disputes. Any disputes related to this Agreement shall first be
brought to the Committee. If that does not result in a mutually agreeable
resolution, then the dispute shall be subject to final and binding arbitration
before a single arbitrator selected by the parties to be conducted in Jackson,
Michigan. The arbitration will be conducted and finished within 90 days of the
selection of the arbitrator. The parties shall share equally the cost of the
arbitrator and of conducting the arbitration proceedings, but each party shall
bear the cost of its own legal counsel and experts and other out-of-pocket
expenditures.
14. Miscellaneous. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto and any prior agreement
of the parties hereto in respect to the subject matter contained herein. This
Agreement will be governed
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by and construed in accordance with the laws of the State of Michigan, without
regard to its conflicts of law principles. All descriptive headings of sections
and paragraphs in this Agreement are intended solely for convenience, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph. All payments to the Executive under this Agreement
shall be reduced by all applicable withholding required by federal, state or
local law and by all authorized deductions. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
CMS ENERGY CORPORATION
As approved by the
Organization and Compensation
Committee of the Board
on October 15, 2003
By: /s/ Xxxx X. Xxxxx
--------------------------------
/s/ Xxxx X. Xxxxxxxx Name: Xxxx X. Xxxxx
-----------------------------
Xxxx X. Xxxxxxxx, Chair Title: Senior Vice President,
Human Resources
/s/ Xxxxxxx Xxxxxxx
------------------------------------
Xxxxxxx Xxxxxxx
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